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"Regularly you get someone on the pulpit talking about a catastrophe and all we can do when faced with these apocalyptic forecasts is do our own work and make our own judgments," he said.

Markets had known for the past two years that China's growth rate was slowing, and there had been nervousness about China's currency devaluation last August.

Doyle said it was "drawing a long bow" to say that the world was on the cusp of another GFC-style meltdown.

Lister and Doyle said it was difficult to be too pessimistic when the United States - the world's biggest economy - added 300,000 jobs last month, at a time of very low interest rates and low energy costs.

Britain's Daily Telegraph columnist Ambrose Evans-Pritchard said RBS warned of a global deflationary crisis and that oil may reach $US16 a barrel.

Watch: RBS tells clients to sell everything

RBS's credit team said markets are flashing the same stress alerts as they did before the Lehman crisis in 2008.

"Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small," the bank said in a client note.

Andrew Roberts, the bank's credit chief, said both global trade and loans are contracting, and warned of blowout of corporate balance sheets and lower equity earnings.

"China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the 'Goldilocks' love-in of the last two years," he said. Oil prices are going to continue to plunge, the bank predicted.

Morgan Stanley has also slashed its oil forecast, warning that Brent could fall to US$20 if the US dollar kept rising. RBS was also concerned about the situation in China worsening.

"We are deeply sceptical of the consensus that the authorities can 'buy time' by their heavy intervention in cutting reserve ratio requirements, rate cuts, and easing in fiscal policy," it said.